Internal Conflict and Security Risks in Altcoins: Assessing Long-Term Investment Viability

The cryptocurrency market has long been a theater of volatility, but the period from 2023 to 2025 has exposed a darker undercurrent: the corrosive impact of internal leadership turmoil and on-chain security vulnerabilities on altcoin projects. These factors, often intertwined, have not only eroded trust but also triggered catastrophic financial losses. For investors, the question is no longer whether these risks exist but how they compound to undermine the long-term viability of projects in a sector already plagued by speculative excess.

Leadership Turmoil: A Catalyst for Operational and Governance Chaos

Leadership disputes in altcoin projects have become a recurring theme, with governance conflicts often spilling into public view. The most high-profile example is the feud between Neo co-founders Da Hongfei and Erik Zhang, which centered on control of the project's funds and governance mechanisms. Da accused Zhang of centralizing financial control, while Zhang criticized the Neo Foundation for opaque financial reporting. Such disputes highlight a broader challenge: many blockchain projects, despite their decentralized aspirations, remain vulnerable to centralized power struggles.

The consequences of such turmoil are not merely reputational. In 2025, the DIN project faced a crisis when its founder, Harold, claimed to have lost his multisignature wallet and laptop while in Myanmar. The project continued its token issuance plan despite this, raising questions about transparency and whether the situation was a calculated PR maneuver. Similarly, Zerebro's co-founder, Jeffy Yu, staged a "fake suicide" via live stream, later admitting it was a strategic move to prevent a token price crash amid harassment and online hate. These incidents underscore how leadership instability can create operational vacuums, leaving projects exposed to exploitation or mismanagement.

On-Chain Security Vulnerabilities: A Growing Threat to Investor Capital

Security breaches in 2023–2025 have reached unprecedented scales, with North Korean-linked groups like the Lazarus Group dominating the threat landscape. The February 2025 hack of Bybit, which resulted in the theft of $1.5 billion in Ethereum, marked the largest single crypto heist in history. Chainalysis attributed this to the DPRK's sophisticated tactics, including embedding IT workers within crypto firms and impersonating executives to gain privileged access. By year's end, North Korean hackers accounted for 76% of all service compromises and stole $2.02 billion in total.

DeFi platforms were not immune. In March 2025, Zoth lost $8.85 million after a private key was leaked, while the UPCX hack in April 2025 stemmed from an unauthorized contract upgrade due to a compromised admin key. These incidents reveal systemic weaknesses in key management and smart contract design. According to Hacken's 2025 Security Report, 52% of all losses that year were linked to North Korea, with 61% of blockchain hacks in 2024 attributed to the same actors.

The Interplay of Leadership and Security: A Recipe for Disaster

The correlation between leadership turmoil and security vulnerabilities is not coincidental. Projects with fractured governance structures often lack the oversight needed to implement robust security protocols. For instance, the Neo dispute over multi-signature wallet control delayed critical security upgrades, leaving the project's funds in a precarious position. Similarly, the DIN founder's disappearance created a governance vacuum that could have been exploited by malicious actors, though the project's continued token issuance suggests a deliberate attempt to maintain investor confidence.

This interplay is further exacerbated by the rise of "fake death" strategies, as seen with Zerebro. While such tactics may temporarily stabilize a project's price, they erode trust in the long run. Investors are left questioning the integrity of leadership teams, which is critical in an industry where transparency is paramount.

Investment Implications: A Market in Retreat

The cumulative effect of these risks has been a sharp reevaluation of altcoin investment viability. In 2025, the crypto market experienced a dramatic downturn, with Bitcoin and Ethereum losing significant value amid regulatory uncertainty and cascading liquidity crises. Structural issues like pro-cyclical liquidity patterns and fragmented infrastructure amplified the impact of shocks, such as the Bybit hack and the Paxos token minting error.

For altcoins, the risks are even more pronounced. Projects with weak governance and poor security practices face a double whammy: declining user trust and regulatory scrutiny. The U.S. and EU's divergent regulatory approaches-such as the GENIUS Act and MiCA-have further complicated compliance, increasing costs for projects already struggling with internal instability. Meanwhile, consumer sentiment remains mixed: while 60% of Americans familiar with crypto believe prices will rise under Trump's second term, 40% remain skeptical about the technology's safety.

Conclusion: Prioritizing Resilience Over Hype

The 2023–2025 period has laid bare the fragility of many altcoin projects. Leadership turmoil and security vulnerabilities are not isolated issues but symptoms of deeper structural flaws. For investors, the lesson is clear: projects lacking transparent governance and robust security frameworks are high-risk propositions.

Long-term viability in the crypto space will increasingly depend on projects that prioritize decentralization, rigorous audits, and community-driven governance. Those clinging to centralized models or opaque practices will find themselves on the wrong side of history. As the sector matures, resilience-not hype-will be the hallmark of sustainable investment.